Maddox Gallery Faces Federal Suit Over Art Valuations in Collateral Swap Dispute
A New York federal lawsuit has placed Maddox Gallery’s valuation practices at the center of a dispute over art-backed lending, collateral swaps, and alleged market manipulation. Luxury Asset Capital, a lender that extends loans secured by high-value assets, says the London- and Dubai-based gallery provided false “good faith estimates” for works by Duncan McCormick and Albert Willem in order to persuade it to accept those pieces as substitute collateral for a George Condo painting.
The complaint, filed last August in the US District Court for the Southern District of New York, traces the conflict to loans LAC made in July 2022 to art dealer Seth Carmichael. When Carmichael defaulted, LAC says Maddox asserted claims to some of the same works, even though delivery had never occurred. LAC’s counsel reportedly told the gallery that those title claims would not hold under the Uniform Commercial Code. The parties later reached a December 2023 agreement under which Maddox would provide replacement collateral, including McCormick and Willem works, in exchange for the Condo painting.
LAC now alleges that the substitute works were presented at inflated values and that the gallery participated in a “pump and dump” scheme that artificially drove auction prices for McCormick and Willem to 10 to 15 times pre-sale estimates. The lender says those prices later fell once the alleged bidding activity stopped, leaving it with assets worth only a fraction of what Maddox had represented. LAC is seeking compensatory and punitive damages.
Maddox has denied the allegations and moved to dismiss the complaint. In a statement, co-founder and managing director Nick Sharp called the claims “bizarre and irrational” and said the matter had been resolved through a private, confidential 2023 agreement. Sharp said LAC had full knowledge of the substitute works before entering the deal and accused the lender of trying to unwind it after the fact.
The case has also drawn the court’s attention to auction records abroad. Judge Robert W. Lehrburger requested international judicial assistance from Christie’s UK and Sotheby’s UK as the litigation moves forward, underscoring how quickly questions about valuation can spill from private dealmaking into public scrutiny.
